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Gibbs v Lakeside Developments Ltd 2018 tells the rare but very unfortunate tale of a long leaseholder who lost her valuable flat because she missed opportunities to defend her landlord’s claims for ground rent and service charge arrears and for forfeiture of her 999 year lease.

Ms. Gibbs bought the flat in 1986 but from 1990 she worked abroad, giving her parents address to the managing agents for correspondence, and never returned to live at the flat. She had previously paid the landlord’s invoices from 1990 to 2006, but thereafter Ms. Gibbs only paid one invoice in 2007.

Because she did not live at the vacant flat, she did not receive notice of the arrears proceedings served on her at the flat in September 2009, or of the eventual possession order made in February 2010. The freeholder took possession of the forfeited lease by peaceable re-entry and put her flat on the market in June 2011.

Ms. Gibbs found out about the marketing of her flat in July 2011 and wrote to the estate agents and the landlords solicitors who had previously acted in the possession proceedings to try to stop the sale, but got no response and the flat remained on the market.

In October 2011 she instructed solicitors who sought an undertaking from the landlord, but when they got no response, they did not seek an interim injunction to prevent the sale while they applied for relief from the forfeiture and to have the possession order set aside.

In December 2011 Ms. Gibbs’s flat was sold by the landlord to a third party at a substantial premium well in excess of the amounts owed. Ms. Gibbs had lost her flat, but even her amended claim for recovery of the proceeds based on unjust enrichment of the landlord from its substantial windfall sale failed. This was because her original application for relief against the forfeiture had been made beyond the statutory 6 month period, despite the bad service of the original proceedings on her by the freeholder during her absence.

Lessons to be learned

Forfeiture of residential leases is rare, but it can happen, especially in the circumstances of this case where there was no lender involved, as a lender could have also sought relief against the loss of its security.

Lessees must pay their ground rent, insurance and services charges due and dispute these separately if they do not agree with the charges. If you own a flat but do not live in it, make sure you provide a contact address to the freeholder and if you receive notice of arrears and threats of proceedings, take them seriously and seek advice quickly. In a worse case scenario where forfeiture has occurred, obtain urgent advice so that an application for relief can be made before the 6 month time limit expires.

Advising on disputes related to ground rent insurance and service charges and applications for relief from forfeiture are among the services in which Prettys’ team of specialist legal advisers is well experienced. Contact commprop@prettys.co.uk or fgalloway@prettys.co.uk for an initial discussion of your specific circumstances.